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Dollar Steadies as Inflation Data Looms, FX Pairs Consolidate | 18th December 2025

Dollar Steadies Ahead Inflation Global markets traded in a cautious and range-bound manner as investors held back ahead of key US inflation data. The US Dollar remained broadly steady, with the DXY hovering below the mid-98.00s, reflecting a pause in directional momentum as traders awaited fresh guidance on the Federal Reserve’s rate path. In the FX space, the Australian Dollar softened amid a firmer US Dollar tone, while AUD/JPY edged lower but continued to find technical support above its 100-day EMA. Elsewhere, EUR/JPY remained elevated near the 183.00 handle as concerns over Japan’s fiscal outlook supported the pair, while USD/CHF consolidated around 0.7950 in line with broader USD indecision. US Dollar Index (DXY) Forecast Current Price and Context The US Dollar Index is consolidating just below the mid-98.00s as traders remain sidelined ahead of key US inflation data. Price action reflects a pause after recent declines, with markets waiting for fresh confirmation on the Fed’s rate trajectory. Key Drivers Geopolitical Risks: Ongoing geopolitical uncertainties continue to provide intermittent safe-haven demand for the Dollar, though conviction remains limited. US Economic Data: Upcoming US CPI is the primary focus, expected to shape near-term Dollar direction. FOMC Outcome: Markets remain sensitive to any signal that inflation could delay future rate cuts. Trade Policy: No immediate trade developments are influencing the Dollar, keeping focus on macro data. Monetary Policy: Fed officials continue to emphasize data dependency, reinforcing cautious positioning. Technical Outlook Trend: Sideways to mildly bearish in the near term. Resistance: 98.70 followed by 99.20. Support: 97.90, then 97.40. Forecast: A CPI surprise could trigger a breakout, but consolidation is favored ahead of the release. Sentiment and Catalysts Market Sentiment: Neutral, with traders reluctant to take strong positions. Catalysts: US CPI data and follow-up Fed commentary. AUD/USD Forecast Current Price and Context AUD/USD remains under pressure as the US Dollar holds firm and rate outlooks diverge. Despite rising domestic inflation expectations, the Aussie struggles to attract sustained demand. Key Drivers Geopolitical Risks: Global risk sentiment remains fragile, limiting upside for risk-sensitive currencies. US Economic Data: Stronger US data expectations continue to favor the Dollar over the Aussie. FOMC Outcome: Reduced confidence in aggressive Fed cuts weighs on AUD/USD. Trade Policy: China-related trade uncertainty continues to cloud the outlook. Monetary Policy: The RBA’s cautious stance limits yield support for the AUD. Technical Outlook Trend: Bearish to range-bound. Resistance: 0.6700, then 0.6750. Support: 0.6620 followed by 0.6550. Forecast: The pair may remain capped unless US inflation surprises to the downside. Sentiment and Catalysts Market Sentiment: Defensive toward the Aussie. Catalysts: US CPI, Chinese economic data, and RBA commentary. AUD/JPY Forecast Current Price and Context AUD/JPY has edged lower below 103.00 but continues to find support above its 100-day EMA. The pair reflects a balance between softer risk appetite and ongoing yield differentials. Key Drivers Geopolitical Risks: Risk-off flows periodically support the Yen. US Economic Data: US inflation data indirectly influences global risk sentiment. FOMC Outcome: Fed expectations impact carry trade appetite. Trade Policy: No direct trade catalysts at present. Monetary Policy: BoJ’s cautious normalization contrasts with RBA’s steady stance. Technical Outlook Trend: Consolidative with downside bias. Resistance: 103.60, then 104.30. Support: 102.00 and the 100-day EMA near 101.50. Forecast: Holding above key support keeps the broader range intact. Sentiment and Catalysts Market Sentiment: Cautious, with reduced carry demand. Catalysts: Risk sentiment shifts and BoJ-related headlines. EUR/JPY Forecast Current Price and Context EUR/JPY is hovering near the 183.00 level, supported by Euro resilience and concerns surrounding Japan’s fiscal outlook. The pair remains elevated despite broader market caution. Key Drivers Geopolitical Risks: Fiscal sustainability concerns in Japan weigh on the Yen. US Economic Data: Indirect influence through global risk appetite. FOMC Outcome: Fed policy expectations shape cross-currency flows. Trade Policy: Stable EU trade conditions support the Euro. Monetary Policy: ECB’s restrictive stance contrasts with Japan’s gradual normalization. Technical Outlook Trend: Bullish but stretched. Resistance: 184.00, then 185.50. Support: 181.80 followed by 180.50. Forecast: Upside momentum may slow without fresh catalysts. Sentiment and Catalysts Market Sentiment: Favorable toward Euro crosses. Catalysts: Japanese fiscal developments and Eurozone data. USD/CHF Forecast Current Price and Context USD/CHF is consolidating around 0.7950 as traders await US inflation data. The pair mirrors broader Dollar indecision, with safe-haven demand for the Franc limiting upside. Key Drivers Geopolitical Risks: Persistent geopolitical risks support CHF demand. US Economic Data: CPI data is the key near-term driver. FOMC Outcome: Expectations of gradual easing cap Dollar rallies. Trade Policy: No immediate developments impacting the pair. Monetary Policy: SNB’s steady stance keeps volatility contained. Technical Outlook Trend: Range-bound. Resistance: 0.8020, then 0.8080. Support: 0.7900 followed by 0.7850. Forecast: A decisive break likely awaits CPI confirmation. Sentiment and Catalysts Market Sentiment: Neutral to defensive. Catalysts: US inflation data and global risk headlines. Wrap-up As markets brace for the upcoming US inflation release, consolidation is likely to persist across major currency pairs. Any surprise in CPI could quickly revive volatility, particularly in USD-linked pairs and high-beta currencies such as the Australian Dollar. Meanwhile, yen crosses remain sensitive to both risk sentiment and domestic fiscal concerns in Japan. With inflation data set to provide a key directional catalyst, traders are expected to stay cautious, keeping positioning light until clearer signals emerge. Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!

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Publication date:

2025-12-18 10:12:11 (GMT)

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